Title issues come in a variety of sizes and shapes, and they can delay your closing or kill your transaction entirely. Title issues include things like a defective recorded document, a judgment, a Federal tax lien, a cloud on the title, like a neighbor who is claiming adverse possession of a strip of land, a gap in the chain of title, a probate that was not completed, and that is just the tip of the iceberg.
Title Issues a Threat
Normally a title issue is discovered as soon as a preliminary title report is prepared by the title company. I saw many defective real estate documents during the years I practiced real estate law. Here’s an example. A property owner decides to create a view easement over a second lot that he owns, because he plans to sell that lot. He hires a surveyor to legally locate and describe the the easement portion of the lot, and the surveyor prepares the drawing showing the easement on the plat, and he drafts an easement agreement. But here’s where the surveyor creates a huge problem for the seller that the seller does not discover until he tries to sell his own house many years later.
The surveyor drafted and recorded a defective easement document. Surveyors are not lawyers, and the two jobs are substantially different. Drafting a legal document like an easement agreement requires legal sufficiency, and surveyors do not go to law school or practice law to learn how to draft legal documents. But surveyors practice law without a license all the time. No one cares, and if they could draft legally sufficient documents, it would be no big deal, but when they record defective agreements that are not discovered until years later when a property is sold, it can create a major title issue, a problem that has to be solved in order to get title insurance.
Title Issues Solved
This can mean hiring an attorney to draft a legally sufficient document, one that the title company will like so they can insure the title. It can delay the closing, and if the required parties are not available or refuse to sign the new agreement, there will be serious trouble. If a buyer cannot get title insurance, they will not be able to get a loan.
Title issues are something you cannot anticipate, but as I’ve written elsewhere, there are a thousands traps for the unwary in real estate. Getting good advice is important if you have title issues. Knowing what the problem is, how to solve it, and applying a diplomatic touch usually will get you through title issues.
Last Updated on September 22, 2019 by Chuck Marunde
